Question 1

If the volume of output of a factory for the month of June is 50,000 units,while the budgeted output was 40,000 units:

Accepted Answer

A) Comparison of budgeted results and actual results will be misleading unless the company uses a flexible budget. 
B) Actual fixed costs per unit may be expected to exceed budgeted levels. 
C) Actual cost per unit will be higher than standard cost per unit. 
D) Both total production costs and unit production costs should be approximately 25% above budgeted levels. 
A) Comparison of budgeted results and actual results will be misleading unless the company uses a flexible budget. 
B) Actual fixed costs per unit may be expected to exceed budgeted levels. 
C) Actual cost per unit will be higher than standard cost per unit. 
D) Both total production costs and unit production costs should be approximately 25% above budgeted levels. A

Question 2

The production schedule in units:

Accepted Answer

A) Cannot be prepared until the budgeted income statement is completed. 
B) Is dependent upon the sales forecast for the period. 
C) Is based upon the manufacturing cost budget,that is,upon the level of funds available for manufacturing costs. 
D) Is the starting point in the preparation of the master budget. 
A) Cannot be prepared until the budgeted income statement is completed. 
B) Is dependent upon the sales forecast for the period. 
C) Is based upon the manufacturing cost budget,that is,upon the level of funds available for manufacturing costs. 
D) Is the starting point in the preparation of the master budget. B

Question 3

In a flexible budget for a profit center,which of the following items would not be expected to vary with the level of activity?

Accepted Answer

A) Revenue. 
B) Fixed manufacturing overhead. 
C) Direct materials cost. 
D) Variable manufacturing overhead. 
A) Revenue. 
B) Fixed manufacturing overhead. 
C) Direct materials cost. 
D) Variable manufacturing overhead. B

Question 4

The most widely used budgeting philosophy is the:

Accepted Answer

A) Operational approach. 
B) Behavioral approach. 
C) Strategic approach. 
D) Tactical approach. 
A) Operational approach. 
B) Behavioral approach. 
C) Strategic approach. 
D) Tactical approach.

Question 5

A budget that adds a new month when the current month ends is called a:

Accepted Answer

A) Capital budget. 
B) Master budget. 
C) Rolling budget. 
D) There is no such budget. 
A) Capital budget. 
B) Master budget. 
C) Rolling budget. 
D) There is no such budget.

Question 6

Which of the following is a major component of a master budget?

Accepted Answer

A) A production throughput schedule. 
B) A machinery maintenance schedule. 
C) A cash budget. 
D) An employee training budget. 
A) A production throughput schedule. 
B) A machinery maintenance schedule. 
C) A cash budget. 
D) An employee training budget.

Question 7

Flexible budgets can be prepared for sales budgets but not for productions budgets.

Accepted Answer

A) True 
 B)False

Question 8

Which element of a master budget would normally be prepared last?

Accepted Answer

A) A cash budget. 
B) A budgeted balance sheet. 
C) A budgeted income statement. 
D) A production budget. 
A) A cash budget. 
B) A budgeted balance sheet. 
C) A budgeted income statement. 
D) A production budget.

Question 9

In a master budget,the sales forecast would be dependent upon the budgeted production figures.

Accepted Answer

A) True 
 B)False

Question 10

A budget provides a comprehensive plan enabling multiple departments to work together in a coordinated manner.

Accepted Answer

A) True 
 B)False

Question 11

When budgeted amounts are set at reasonable and achievable levels:

Accepted Answer

A) They reflect a "total quality management" philosophy of management. 
B) A highly efficient department should fall slightly short of budget standards. 
C) Meeting the budgeted amounts ensures a maximum level of profitability. 
D) Failure to stay within the budget is viewed as an unacceptable level of performance. 
A) They reflect a "total quality management" philosophy of management. 
B) A highly efficient department should fall slightly short of budget standards. 
C) Meeting the budgeted amounts ensures a maximum level of profitability. 
D) Failure to stay within the budget is viewed as an unacceptable level of performance.

Question 12

In preparing a master budget,budgeted levels for production,manufacturing costs,and operating expenses normally are determined after preparing the sales forecast.

Accepted Answer

A) True 
 B)False

Question 13

As the volume of output decrease:

Accepted Answer

A) Fixed costs per unit will increase. 
B) Fixed costs per unit will decrease. 
C) Fixed costs per unit will not change. 
D) Fixed costs in total will decrease. 
A) Fixed costs per unit will increase. 
B) Fixed costs per unit will decrease. 
C) Fixed costs per unit will not change. 
D) Fixed costs in total will decrease.

Question 14

Harding Company expected sales to be 50,000 units in February,45,000 in March,and 55,000 units in April.Each unit sells for $18.00 each.The following costs pertain to each unit:   Harding is considering an advertising campaign which will cost $15,000 per month from January to March and is expected to increase sales by 8% a month.At the same time Harding will reduce sales prices to $17.00 per unit while keeping costs steady.
Required:
(A.)What will operating income be in each of the three months before the advertising campaign?
(B.)If Harding goes ahead with the advertising campaign,how much would operating income increase or decrease each month? Would you advise them to go ahead with the campaign?

Accepted Answer

@#IMG-DLM& Total operating income for th

Question 15

The master budget may be comprised of:

Accepted Answer

A) The production budget. 
B) The current period income statement. 
C) The current period balance sheet. 
D) The current period statement of cash flows. 
A) The production budget. 
B) The current period income statement. 
C) The current period balance sheet. 
D) The current period statement of cash flows.

Question 16

Discuss the benefits that a company may derive from a formal budgeting process.

Accepted Answer

The benefits of budgeting are the benefi

Question 17

A company's operating cycle is the time between purchases of direct materials and conversion of these materials back into cash.

Accepted Answer

A) True 
 B)False

Question 18

Flexible budgeting
What is meant by the term flexible budget? What role do flexible budgets play in evaluating performance?

Accepted Answer

A flexible budget is one which may be ge

Question 19

Costs that rise and fall proportionately with the volume of output are often

Accepted Answer

A) Variable costs. 
B) Flexible costs. 
C) Idle capacity costs. 
D) Uncontrollable costs. 
A) Variable costs. 
B) Flexible costs. 
C) Idle capacity costs. 
D) Uncontrollable costs.

Question 20

Budgeted debt service costs
On April 1,Fisher Corporation borrowed $400,000 from its bank by signing a 9%,5-year note payable.The note calls for 60 monthly payments of $6,150,which includes both interest and principal components.
(a)Interest expense budgeted for April amounts to: $_______________
(b)The carrying value of the note to be reported in the company's budgeted balance sheet as of April 30 is: $_______________
(c)Interest expense budgeted for May amounts to (round to nearest whole dollar): $_______________
(d)The carrying value of the note to be reported in the company's budgeted balance sheet as of May 31 is (round to nearest whole dollar): $_______________

Accepted Answer

(a)3,000 (

Exam 23: Operational Budgeting

If the volume of output of a factory for the month of June is 50,000 units,while the budgeted output was 40,000 units:

The production schedule in units:

In a flexible budget for a profit center,which of the following items would not be expected to vary with the level of activity?

The most widely used budgeting philosophy is the:

A budget that adds a new month when the current month ends is called a:

Which of the following is a major component of a master budget?

Flexible budgets can be prepared for sales budgets but not for productions budgets.

Which element of a master budget would normally be prepared last?

In a master budget,the sales forecast would be dependent upon the budgeted production figures.

A budget provides a comprehensive plan enabling multiple departments to work together in a coordinated manner.

When budgeted amounts are set at reasonable and achievable levels:

In preparing a master budget,budgeted levels for production,manufacturing costs,and operating expenses normally are determined after preparing the sales forecast.

As the volume of output decrease:

The master budget may be comprised of:

Discuss the benefits that a company may derive from a formal budgeting process.

A company's operating cycle is the time between purchases of direct materials and conversion of these materials back into cash.

Flexible budgeting What is meant by the term flexible budget? What role do flexible budgets play in evaluating performance?

Costs that rise and fall proportionately with the volume of output are often

Accounting: Information for Decision Making

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Costing and the Value Chain

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Rewarding Business Performance

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